INSTEON

[pkoslow]

Just curious if anyone has been installing Insteon for customers yet?

I've converted around 80% of my own house (the remaining 20% is usually in flux testing UPB, Z-Wave, Lutron, etc) and am finding that I like it more and more.

The switch based scene lighting seems to work well once setup and is ideal for small installations where the customer doesn't plan to have an automation controller or PC. Having a simple plug-in timer module that is sunrise/sunset aware would really finish the equation for simple installs!

So far, I've only installed 9 Insteon devices at one customer job which are all located in a Master Suite remodel. The job's not complete so I've not returned to program them yet, but the electrician does have them all installed. The loads on each switch are quite small (around 200w max) so they haven't experienced any flicker issues, but they aren't living in the rooms yet either so it's mostly the tradesman that have been using the lights to work.

These are the older "pre-flicker fix" switches and now there's talk of yet another fix to update the firmware. While I don't mind swapping switches at my own home, I have to sub an electrician at $75hr to do this for customers. With margins being basically non-existant on the Insteon gear to start with, it's going to cost me several hundred bucks if I find that the customer's switches need to be replaced!

Back to the margin... are any of you staying away from Insteon simply because you can't make any money selling the switches? I've personally directed some DIY types that I've been doing consulting with directly to Smarthome when they have the sales as they can buy the switches at a better price than I can as a dealer with the 10% off coupons.

Smarthome is obviously marketing Insteon to the DIY crowd which is a great thing, but I'm afraid that the limited ability to make a profit on the products will severely limit it's adoption by pros even if it matures into an excellent product?

I bring this up because I really like Insteon, but with the growing pains and small margins I'll likely stick with UPB and Lutron for customers.

Would be really interested to here opinions from anyone already installing Insteon for customers... especially how you will handle the potential replacements for flicker or firmware?

Thanks,
Paul

 

[gregoryx]

Please forgive what may seem a pointless post... but I'm making it anyway. My curiosity is up.

Our company sells products with little or no margin in an environment where our competition complains about that "problem"... yet we are not really effected by it.
We can't (yet) change the market, but we have found rather different ways to capitalize on what the competition sees as a market problem.

I'm not trying to be vague; our market is business - focused, not consumer; I have no specific experience in the HA/ AV business space.

I get excited when I hear of shared difficulties among resellers relating to common problems of margin and products targeted at the buyer/ consumer, not reseller. That's exactly how, where, and why we were able to create our niche and grow it for 10+ years. Once we accepted that the future was zero-margin Chinese-built hardware marketed directly to buyers (not resellers), we ran toward how to capitalize on it. Believing that we couldn't change that inevitable future, we determined that we would be at an advantage if we figured out how to make a profit in it before the competition. It has proven rewarding.

I get tempted to enter the HA business when I'm reminded of the market and the accepted view of that market. I'm looking forward to seeing HA business owners post how they're embracing this "problem" for greater profit.

Forgive my (perhaps uninformed) excitement. B)

 

[Rupp]

Paul,
Do the people that you do professional installs for actually know SmartHome even exists? It seems like your margin is what you make it and not based on the fact that they can get the switches cheaper. I can by brake pads cheaper than Ford can but yet I still let them do my brakes.

 

[DavidL]

Paul, can't you buy the 2x4s and 14 gauge wire, and kitchen cabinets at Home Depot that most people buy thru their Home's General Contractor?

Same analogy here. You are not selling switches. You are selling automated home systems and services.

If your customer shops you and finds the switches cheaper, then he is smart enough to do a materials list, specify the types, plan the design, work with the subs, configure the software, and warranty the end result.

Most won't want to bother, and that is what we find with most of the Cinemar dealer installations. non DIY'rs just want it done and working and cool.

 

[electron]

I agree with David here, couldn't have worded it better. It really bothers me that some manufactures up the prices of their product because the installers are complaining that there is no profit margin. If the customer finds the switches somewhere else cheaper, then he isn't worth your time. You should not have to justify to your customers why your switches are more expensive, since you are delivering an end product/service.

 

[upstatemike]

Cetainly a raw switch is a different price from an installed switch which is different still from a programmed switch. Worst case if you have to break it out for your customer and show the retail switch price and actual electrician charges, you still can show programming time at a healthy rate. Might be easier to have a flat per switch program charge then trying to justify how much programming time is required per switch. (Make sure your programming time includes design time in addition to keyboard/tap-tap time. Also account for paddle color changes and keypad lableling time in the charge.)

 

[pkoslow]

Thanks for all the replies so far... I'm in no way bent out of shape about this, and it's not even a real problem to me as I'm not actively selling and installing Insteon for customers.

Smarthome has obviously targeted the DIY market with these devices and I think that's a smart choice as this market segment is growing all the time and may equal or already exceed that of the custom installer??? Anyone know?

The bulk of our profit is already based in services as many other products carry low margins as well, but every little bit helps and I expect most pros will gravitate to product lines that they can make some money on.

A big part of my inquiry was also to find out how installers are dealing with the RMA's for the flicker and future firmware upgrades. I just swapped out 9 devices last weekend at home and may find that I need to replace 35+ when the firmware fixes are available? Again... no big deal for me, but if these switches were at a customer's it would be a huge deal from an inconvienence and cost standpoint to replace them.

I'll provide some feedback to specific replies in new posts, but back to the original question... are any pros installing Insteon for customers?

Cheers,
Paul

 

[pkoslow]

Paul,
Do the people that you do professional installs for actually know SmartHome even exists? It seems like your margin is what you make it and not based on the fact that they can get the switches cheaper. I can by brake pads cheaper than Ford can but yet I still let them do my brakes.

Hi Rupp,

You're right, I don't expect any of my customers have any idea who Smarthome is, but I still don't know that selling Insteon devices for more than retail is something that I'd ever do.

Installation and programming is a different story, but I invoice for parts and labor separately and don't lump it all into the "cost" of a light switch.

Cheers,
Paul

 

[pkoslow]

David, Electron & Mike,

All your posts are right on the money. There's still profit to be made on the installation & programming and the real value added is the experience and project managment which is what really seems to be bringing me referrals and generating the income.

I was mostly just curious to see if anyone else was installing Insteon because I'm really starting to like it. Once it's gets through the initial growing pains I think it will be a great product!

Cheers,
Paul

 

[Dean Roddey]

A lot of the custom installer world is very much oriented towards making their money on the markup on the hardware, I guess perhaps because this is the way it's done with Crestron/AMX, where there is no (practical for the non-DIY customer who just wants it installed) way for them to get that hardware via an alternative (read competitvely priced) route. This is probably easier for them since they don't need to dicker with the customer about what doing X or doing Y is worth, they can make it on the hardware which has high markup included.

But I've also been arguing with them that they need to move towards a fee for service model because the Crestron/AMX model isn't going to last forever as products like ours become more powerful and as Crestron/AMX have to eventually meet this challege by moving more in that direction as well (i.e. using more off the shelf hardware where it's harder to justify a big markup.)

Here's a quote from a report from AMX (which is publically held and therefore it's easier to get information about them than Crestron):

Gross margins of 53.6% for the quarter ended June 30, 2003 were up from margins of 50.6% for the year ago quarter. Efficiencies gained from the Company's outsourcing strategy and higher margins on new products have had a positive impact on our operating margins over the last year. Because of adverse market conditions, the Company still anticipates some pricing pressures throughout the remainder of the fiscal year, which could result in some margin deterioration.

They are reporting gross margins of 53% in 2003, and their numbers overall are up now from then so one would assume they are still at least doing that well. In order for them to have that margin when they sell everything through installers who mark it up also, I guess the overall gross markup to the consumer must be in the 65% to 75% range? But I could be missing something there, not being the greatest business analyst of all time.

That's probably not that huge a markup given the low volume in this automation market, but it shows how much is being made on the product itself. Anyway, if the installer can write up the proposal and almost all of the cost is in the equipment, which he can show the customer the MSRP for (which me probably gives them a break on and still has a large markup), that probably makes for an easier time for them because the money is going to a thing that the user can pick up and see, and can't go search for cheaper prices on on the internet.


But in the end, it will be inevitable that the hardware will become fairly commodity and the money will have to be made on software, packaging, and support by folks like us and on services by the installer, IMHO. It won't happen tomorrow, but I think it's coming.

 

[Captain Caveman]

..., but back to the original question... are any pros installing Insteon for customers?

I have installed various Insteon switches in a recent install. They work great with the Cortexa controller, and they always work as they should.

The only problems encountered was the flicker issue when dimming the ICON switches, which should be resolved with an RMA to Smarthome for an updated switch.

Programming the links was slow, but I understand that Smarthome will be resolving that issue in a future firmware update which relates to extended messaging as described here in a previous post.

Because of the success of that install I plan on using Insteon on all future installs!

 

[electron]

I am really curious as how installers will deal with the very needed firmware upgrades.

 

[Rupp]

..., but back to the original question... are any pros installing Insteon for customers?

I have installed various Insteon switches in a recent install. They work great with the Cortexa controller, and they always work as they should.

The only problems encountered was the flicker issue when dimming the ICON switches, which should be resolved with an RMA to Smarthome for an updated switch.

Programming the links was slow, but I understand that Smarthome will be resolving that issue in a future firmware update which relates to extended messaging as described here in a previous post.

Because of the success of that install I plan on using Insteon on all future installs!

How do you deal with the constant switch replacements? Do you charge the customers?

 

[upstatemike]

I would put language in the contract that says services are warranted by the installer and hardware is warranted by the manuafacturer. Specifically state that warranty hardware replacement does not include labor and shipping unless the manufacturer chooses to extend their warranty to cover those costs.

 

[pkoslow]

Specifically state that warranty hardware replacement does not include labor and shipping unless the manufacturer chooses to extend their warranty to cover those costs.

Mike,

That sounds good on paper, but I don't think it would fly with my customers...

I'm only selling and installing products that I recommend so if I put in 40 Insteon switches for a customer and then told them 3 weeks later that they all needed to be replaced and that was going to cost them $1000-$1500 dollars!

If you were my customer... how would you feel about that?

In all reality, I'd eat the cost instead of damaging my reputation and apologize to the customer for the added inconvienence.

I do think what you suggest is good to have in the contract... if one switch fails a year from now, I'd charge labor to replace it even if the manufacturer was still covering the product replacement.

This Insteon situation is a little different which is why I'm curious what others are doing.

Captain Caveman - Are you planning to cover the labor to replace the flickering swithces? Pleased to hear that you're having good success with Insteon!

Cheers,
Paul